Budgeting for Home Expenses

I'm a first time homeowner who is going through the process of a renovation prior to moving in.  Some of the renovation items are for replacement/fixes that came out of the Home Inspection (i.e. fixing GFCI outlets, replacing broken faucet, etc).

 

I had a few questions on how to budget for Home expenses.  I have some questions on how to budget/categorize home specific expenses.

  • If you budget 1-2% Monthly for Home Maintenance, what expenses fall under that bucket?
  • How would you categorize:
    • tools needed for around the house
    • home furnishings like carpet/couches, blinds, mirrors, etc.  
    • replacement vanity for bathroom, lighting (are they home furnishings if you are replacing things by choice, or do they fall into the 1-2% Home Maintenance)?
    • Grill for Outside
    • Kitchen Items
    • Items you would get at Container Store
    • Alarm system installation (monthly service would be a separate monthly expense)
  • Do you go with the wish farm method for every large home category, or do you fund a "Home Furnishings" category monthly?
  • What is considered a renovation vs. something that falls into your Home Maintenance bucket?  If our water heater is replaced by choice (20 years old) before it goes is that no longer Home Maintenance?  I.E. is it only Home Maintenance if it's a "Need" vs a "Want"?
  • I have a renovation and budgeted to the micro level (i.e. Washing Machine, Dryer, Wood Floors).  Is there a benefit to going to that level of detail vs. keeping things more general?  
  • Any other general advice on things I'm not thinking about 

 

Thanks in advance!  

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  • You shouldn't have to pay for an alarm system installation. Every one I've had does the install for free, so shop around for providers.

    Like
    • tools needed for around the house - home improvement
    • home furnishings like carpet/couches, blinds, mirrors, etc.  - need - home maintenance, want - home improvement
    • replacement vanity for bathroom, lighting (are they home furnishings if you are replacing things by choice, or do they fall into the 1-2% Home Maintenance)? need - home maintenance, want - home improvement
    • Grill for Outside - home improvement
    • Kitchen Items - home improvement or household goods
    • Items you would get at Container Store - home improvement or household goods
    • Alarm system installation (monthly service would be a separate monthly expense) - Alarm system

    In general I use home maintenance for a need, and Home Improvement for a want. I have separate line items for recurring home maintenance that I outsource (lawn care, pest control, alarm system, etc.)

    For small kitchen items we have a Household goods category.... smaller things you'd buy at Bed Bath and Beyond.

    The fact that you are having to do a lot of the work up front doesn't make a difference.

    Like 2
      • jestarr
      • jestarr
      • 2 mths ago
      • Reported - view

      nolesrule What else would fall into Household Goods?  What is the difference between Household Goods and Home Improvement?  New Sheets, Shower curtain, etc. ?  

      Are Household Goods and Home Improvement categories that you fund at the annual average expense on a monthly basis?  

      Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 mths ago
      • 1
      • Reported - view

      jestarr It's a judgement call. For us Household Goods is anything under about $50 that is durable. Mostly kitchen and bathroom items.

      I keep it simple and don't budget for individual items, but we fund the Home Improvement category relatively generously.

      Like 1
      • jestarr
      • jestarr
      • 1 mth ago
      • Reported - view

      nolesrule I've been thinking (probably overthinking) this category.  Do you put these $50 items into Household Goods because they happen with some level of frequency?  How do you decide what to budget here?

      We had to buy a mailbox (the house actually didn't have one), and we decided to replace the door knobs on the bedrooms to match each other.

      What is the benefit/reasoning of going with Need vs. Want for you when you lay out your budget?  I know that budgeting is very personal, but I always love to hear the thought process of other users.  Especially ones as helpful as you've been!  

      Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 mth ago
      • Reported - view

      jestarr Home maintenance and repair funding is based on a rule of thumb (1% rule). Therefore I only include expenses that are covered by that rule of thumb. Those are things that are specific to the upkeep up the house.

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      • jestarr
      • jestarr
      • 1 mth ago
      • Reported - view

      nolesrule I meant Household Goods vs. Home Improvement.  

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      • MXMOM
      • MXMOM
      • 1 mth ago
      • 1
      • Reported - view

      jestarr at the end of the day, the categories should make sense to you. You can move them around among category groups so it becomes what level of granularity to you want/need.  You can combine categories later but harder to split them.  What do you want to see on reports? How do you think about these things? How much work do you want to do if you go to Home Depot and buy things in multiple categories and need to split transaction?   Just for reference here are mine.

      Home Depot/Lowes/Canadian Tire - this is the catchall bucket for all the little trips for stuff I don't want to chase the details for.  We fund this monthly with a fixed amount and don't build up the available.

      Repairs/maintenance - this is for bigger things like painting a room. I see them as things that don't add value to the house but keep it going.  This is funded on an as needed basis.

      Furniture/Appliances - as the name says for big ticket household items like washer or couch.

      Garden - all things outdoor (that aren't caught in the Home Depot etc. category). This would include plants, outdoor furniture, stain for the fence.

      Then for any "project" that improves the house like the current stair project we are working on (replacing carpeted stairs with oak treads), we create a separate category. I do this because it helps project manage the budget, I can see the total cost of the project vs the expected value increase, and it doesn't cause the averages in the other categories to spike. Also, once the project is over I can hide this category.

      Projects usually start out as wish farm and then get moved to the appropriate category group.

      For household stuff like cleaners etc. they generally get lumped into grocery (if we buy them at the grocery store) or to Home Depot etc. category if bought there. 

      Like 1
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 mth ago
      • Reported - view

      jestarr Mostly I use household goods for the kind of stuff you might get at a place like Bed bath and Beyond. Kitchen utensils, small low cost appliances, etc. Accessories.  Low cost durable items. Home improvement would include things like replacing fixtures and such that are not end of life.

      Like
  • I would put the water heater in "maintenance" because it's likely on its last legs. However, I would probably wait to replace it until it dies. (Possibly buy a replacement on a major sale like Black Friday.) 

    I view Renovation as something you want to do but really don't have to. A replacement vanity & lighting would fall in this category for me -- again, because you could use what's there (at least that's my assumption).

    I have a category called Household Goods which would cover tools, furnishings, grill, kitchen items, and so forth.

    I favor a more detailed plan on the renovation so you don't leave yourself short on whatever is bought "later".

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      • jestarr
      • jestarr
      • 2 mths ago
      • Reported - view

      dakinemaui Household Goods seems like a big catch-all for you.  How do you budget that category?  Would a new couch fall there for you?  

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view

      jestarr If I bought a used couch for cheap, I'd call it Household Goods. If it was new and several thousand dollars, I'd save up in a dedicated category.

      For the purchase, I'd probably then reallocate to Household Goods. Yes, this increases the average of that category, but I don't base my budget entry for this category on the average.

      However, if you did want to be able to use the average for things that are arguably more "typical", you could just categorize to the New Couch category and call it a day.

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view

      jestarr Oh, as far as budgeting, it's usually a relatively low priority for me, so it's contribution is fairly well tied to whatever's left after doing other things. I put in $100 per month and reallocate when needed.

      Like
    • Scott
    • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
    • Scottgoeshiking
    • 2 mths ago
    • 1
    • Reported - view

    I like the Home Improvement and Home Maintenance categories discussed above. I also use a Home Furnishings category which slots in between. Home furnishings are things like new furniture, blinds, curtains, mattresses, and other furniture-like durables that have some degree of optionality (you generally have some flexibility on when or if you choose to make the purchase) and tend to last for more than a year. I might eventually budget this category directly, but for now it gets budgeted from flex categories and things like a couch or mattress would probably be wish farmed first.

    Home Maintenance is a reserve fund for medium sized "keep the lights on" items like a new dishwasher or dishwasher repair, a new oven or microwave, repairing a broken window, leaky faucets, ac repair, and so on. These are things that keep the home functional and generally aren't elective. When it breaks, you need to replace it ASAP.

    If I had an ongoing item like lawn care, I'd probably give it it's own category.

    Larger planned items like roof replacement, water heater replacement, AC replacement, new carpeting, and similar big budget items that tend to need replacing on a timeline get their own budget categories based on expected replacement date.

    Home Improvement is a category for nice-to-have, durable, big ticket improvements. These items generally grow in the wish farm. This might include new landscaping, an addition or remodel, or adding a new shed. In principle, this is the only category of improvements that has the potential to significantly increase the value of the property.

    Based on other comments, I also added in a Household Goods category. I plan to use this to absorb some of my grocery budget, which currently includes things like cleaning sprays. I want this category to contain smaller items that could be in Home Furnishings but that have a lower cost and/or shorter lifespan and may be less optional. Things like shower curtains, sheets, cleaning agents, laundry detergent, brooms, trash cans and trash bags, and a new vacuum might go in this category. It flows somewhat freely into Home Furnishings and the distinction between the two is somewhat arbitrary, but having these two categories will help me distinguish between how much I'm spending on small items to keep the house running vs larger items that will last and might require more thought. If an item needs to be wish-farmed, it's almost definitely a Home Furnishing and not a Household Good.

    Like 1
      • jestarr
      • jestarr
      • 2 mths ago
      • Reported - view

      Scott I like this approach.  I do Household Goods for cleaning supplies, paper towels, etc.  When it comes to your Home Improvement wish farm, do you create separate categories with a goal for each item (i.e. addition, new shed), or just budget generally?  

      Like
      • Scott
      • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
      • Scottgoeshiking
      • 2 mths ago
      • Reported - view

      jestarr I always wish farm for specific items, so a New Shed would get it's own wish farm category. When the category is full, I'd move the funds to Home Improvement and record my shed-related spending to the Home Improvement category (and retire the wish farm shed category).

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • 1
      • Reported - view

      jestarr My Household Goods are for durable items. If it's nailed down, it's Home Improvement (or Maintenance/Repair). If not nailed down, it's Household Goods.

      I lump consumables into "Groceries/Consumables", mainly because it avoids splitting a lot of transactions. (Supplies are usually bought at the same time/store as groceries.) Being consistent with categorization quickly results in budget entries that are sufficient for the increased cost of "non-food" items.

      Like 1
      • jestarr
      • jestarr
      • 2 mths ago
      • Reported - view

      Scott When you do that do you then hide the Wish Farm category, or delete?  Do you ever budget to the main Home Improvement category directly?  If so, how do you decide what you are going to budget?  Averages, a random number?  

      Like
      • Scott
      • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
      • Scottgoeshiking
      • 2 mths ago
      • Reported - view
      jestarr said:
      When you do that do you then hide the Wish Farm category, or delete?

      I usually delete wishlist categories once I'm done with them. Since I'm not allocating spend to these categories, I don't think there's any impact on reporting.

      jestarr said:
      Do you ever budget to the main Home Improvement category directly?

       No.

      jestarr said:
      If so, how do you decide what you are going to budget?  Averages, a random number?  

       I don't budget to it directly because Home Improvements are significant expenditures that are 100% elective. I said generally before, but really it's 100% of the time that I wish-list Home Improvement items, and this doesn't happen often. In my model, budgeting for Home Improvements directly would be a way to anticipate that at some point in the future, you'll want to spend money on an unknown major improvement. If that sounds like you, go ahead and budget it directly. For me though, I could rattle off a handful of specific items that I could be funding instead.

      Like
  • I have a notoriously difficult time budgeting for Home/Wish type expenses.  I just bought paint samples for the paint before having the rooms in the house painted.  I have a Wish Farm for the cost of painting the rooms.  Does that go to that, does this go to a more general category?  

    Like
      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • 1
      • Reported - view

      jestarr I would put the paint samples in the Paint The Rooms category.

      The point of all this is to avoid spending money intended for X on something else. The choice of categories is just to let you keep things straight. Use as many categories as it takes to do that.

      Whether you record spending against that category directly or you reallocate to a more general category is also a bit ancillary. Again, the main point of YNAB is to help you plan future spending. You may be having a hard time deciding which approach to use because there's no wrong answer. Just pick an approach and run with it. If you want to try the other approach on the next project, that's cool, too.

      Like 1
  • I guess I keep things simpler than most, reading through the comments! I don't necessarily break things down by need vs want - it's too subjective for me...

    I have a Home Items category where everything from kitchen utensils to sheets to the new bathroom vanity we just purchased goes. I budgeted a lot to that category for the first month and add a reasonable amount for each month after. A new couch would go there as well. If there wasn't enough money in there for a new couch it would probably become it's own saving or wish farm item

    I have a Home Maintenance category where all of the "necessary" home stuff gets put. Things that either need to be or should be fixed/replaced. Painting supplies, tools, anything hubby buys at Home Depot for which he doesn't give me a receipt so I have no idea what it really is, appliance repair people and appliance replacements. New faucets for the new vanity - Home Items. New tube of caulk for new vanity-Home Maintenance.

    Outdoor stuff- mulch, plants, grill, lawnmower etc. goes to Lawn/Garden.

    Like 1
  • I'm not sure what I would do for the pre-move in work. If you're having the kitchen completely redone I would put that in a separate Kitchen Reno category. If your're just having outlets replaced then Home Maintenance. If a combination of things then maybe something like Stuff Done to get House Ready to Move into (joking on the title!) since that's a one-time event...

    Like
      • Scott
      • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
      • Scottgoeshiking
      • 2 mths ago
      • Reported - view

      Periwinkle Flute Having this conversation with myself right now, prior to buying anything. I figure any remodel is going to take 3x as long, cost 3x as much, and be 3x more of a pain than I anticipate. Remodeling a kitchen while living in the unit is a significant inconvenience that might merit paying for it to be done in advance, especially if that involves shutting off gas lines, water, or electricity in order to move hookups.

      Like
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